Analyzing Monday's trades:
GBP/USD on 30M chart
The GBP/USD pair tried to extend its upward movement on Monday, but this was in the absence of influential economic releases so it failed. In addition to that, the US reports from Friday were not weak enough for the dollar to fall further on Monday. Sterling does not have any reason to rise, and the USD does not have any reason to fall either. If it starts a corrective movement, it should be weak and slow. If the pound surges, it may indicate the resumption of the global uptrend, which, from our perspective, is completely illogical. Therefore, we are expecting a correction, followed by a decline. This week, there will be very few important events. The only noteworthy ones are the UK's GDP report for the second quarter and the US inflation report.
GBP/USD on 5M chart
On Monday, several trading signals were formed on the 5-minute chart. The break below the level of 1.2748 occurred overnight, but traders could have opened a short position once the European session started, as the price had not moved far from the formation point by that time. The pound fell by about 20 pips, so the Stop Loss should have been set to breakeven. The second buy signal was formed at the beginning of the US session, around the same level. In this case, the pair moved 25 pips in the right direction. That's what beginners could have gained on Monday. It was a low-volatility day for the pound.
Trading tips on Tuesday:
On the 30-minute chart, the GBP/USD pair broke the short-term downtrend. Now, the pound may correct higher, but we shouldn't expect a strong uptrend. We expect the pound to fall, as we still believe it is overbought and unreasonably expensive. The key levels on the 5M chart are 1.2538, 1.2597-1.2605, 1.2653, 1.2688, 1.2748, 1.2791-1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Tuesday, there are no important events or reports lined up in the US and the UK, so we should brace ourselves for another low-volatility day with no trends. The pair may continue its slow upward movement within the corrective phase.
Basic trading rules:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
